• The US has proposed the EU impose tariffs on Russia's oil rather than an embargo to limit price rises and cut Moscow's revenues.
  • US Treasury Secretary Janet Yellen raised the idea with G7 and EU allies as they look to step up sanctions against Russia.
  • The EU has proposed cutting all Russian imports of crude oil and refined products by the end of this year.

The US has proposed that the European Union impose tariffs on Russian oil that would avert another surge in prices but still impact the revenues flowing into Moscow's coffers.

The tariff would come into place before the European Union imposes a full ban on Russian oil by the end of this year. This would allow Europe to still purchase Russia's oil while limiting the country's revenues from it.

US Treasury Secretary Janet Yellen discussed sanctions on Russia with EU allies this week. Yellen had previously said the EU's oil ban would lead to surging energy prices. The FT quoted an unnamed Treasury official as saying one of th options under consideration was a price cap, or tariff.

"We discussed a wide range of options. We're not trying to tell them what's in their best interest, but [ . . . ] we discussed some of the things that are under consideration," Yellen told reporters, according to the FT.

The European Union has proposed a total ban on Russian oil imports that would see all crude and refined product imports phased out within six months.

"In the meantime, it might be possible to combine a phase-out with a price mechanism,," Yellen was quoted as saying after meeting with European Commission president Ursula von der Leyen on Tuesday, according to the Wall Street Journal. "It is critically important that they reduce their dependence on Russian oil."

Russia supplied about 25% of the EU's oil imports in 2021, far more than any other country, official figures show. EU member Hungary is holding up the ban as it is more reliant on Russia for oil. Germany, another major importer, has backed the embargo but warned that a ban will harm Europe's economy. 

Russian oil exports to the European Union are likely to drop by around 3 million barrels per day under the bloc's embargo plans, in what would be a "seismic shift" for global markets, consultancy Rystad Energy has said.

Yellen praised the EU's stance on banning Russian oil saying, "Russia is using energy as a weapon to deploy against those who stand against its aggression.  The United States is committed to working with Europe in your efforts to meet your energy needs, while also breaking dependence on Russian energy."

The US has already banned Russian energy imports. The Treasury Department did not immediately respond to a request for comment from Insider.

Oil rose on Wednesday, with Brent crude futures gaining 1.17% to $113.23 per barrel while WTI crude futures rose 1.42% to $111.19.

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